Canada need not fear US move against oil sands – think tank

12 January 2010 19:06[Source: ICIS news]

TORONTO (ICIS news)--Canada has options should the US decide to impose tough environmental measures against imports of oil sands or oil sands-based products from Alberta province, a think tank said in a study on Tuesday.

“?xml:namespace>Canada can and likely will push back, especially since China is more than happy to step in and purchase oil... if the US chooses not to,” the Washington, DC-based Council on Hemispheric Affairs said in a report.

Canada’s petrochemicals producers are looking to off-gases from upgrading oil sands as an important source of feedstock to supply existing capacities, as well as expansions and new plants.

“All too soon, Washington may find that if it pushes too hard or too fast with carbon-cutting legislation targeting the oil sands, its friendly neighbour might finally grow tired of being taken for granted when it comes to oil,” the think tank said.

“It remains to be seen if Canada will be willing to swallow the bitter cost of heavy US regulations which disproportionally harm the oil sands,” it said.

It noted Prime Minister Stephen Harper’s recent high-profile trip to China during which he aggressively advertised Canada as the country with “the resources to meet China’s ever-growing needs.”

A number of Chinese firms, including oil and petrochemical majors Sinopec and Petro-China, have already invested in Alberta’s oil sands sector.

Furthermore, Canadian energy firm Enbridge has proposed a pipeline from Alberta to a Pacific coast port in British Columbia province, opening up Canadian oil exports to China and other Asian markets.

If realised, the project would compete against the present north-south pipeline infrastructure which has given the US a monopoly over Canadian oil export flows.

According to the think tank, the US already relies on Canada, its largest foreign supplier, for 17% of its oil imports, nearly double the imports from the next largest supplier, Mexico. In September last year, Canadian oil exports to the US ran at 1.9m bbl/day.

“All things considered, it is clearly in Washington’s best interests to carefully reconsider any environmental legislation that targets Canada’s oil sands,” it said.

The warning comes as the US administration this month announced broad new restrictions for US onshore oil and gas drilling as it is pushing for more clean energy to reduce greenhouse gas emissions.

President Barack Obama has highlighted Alberta’s oil sands industry as a concern, and in California, officials have talked about banning the import of oil from oil sands into the state because of the large carbon footprint of the Alberta extraction projects.